Philly Fed index rockets to 33-year high in another postelection blast

The Philadelphia Fed stated its manufacturing index increased to impressive levels in February to a 330-year record high, implying the improvement of business sentiment since the Republican election sweep.  The Philadelphia Fed index heaved to 43.3 from 23.6 in January, which has been the highest level since early 1984.  It is well above the economic consensus for a reading of 20. It is also the largest one-month increase in the index since June 2009.

Manufacturing activity in Philadelphia has improved since the middle of last year.  “It is an exaggeration to suggest that we are on the cusp of Morning in America, but factory managers are clearly feeling very good about their prospects in the wake of the election,” said Stephen Stanley.

Jim O’Sullivan, chief U.S. economist stated that factory owners expectations may have raised too much and could be disappointed.  Blerina Uruci, economist at Barclays, commented that industrial production and manufacturing data for January was weak and “have yet to show the business optimism translating into output growth for the sector.

Mike Trebing, senior economic analyst at the Philadelphia Fed, stated the increase in the index implies growth.  Employment diminished but has stayed in a positive direction for the third consecutive month.  Price pressures remained the same.  The market has not changed much due to the data. S&P 500 futures traded lower by 3.6 points.

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